18 August 2014, News Wires – Brent and US crude futures jumped more than $1 a barrel on Friday on news that Ukraine forces had engaged a Russian armoured column on Ukrainian soil.
Ukrainian artillery destroyed a “significant” part of a Russian armoured column that crossed into Ukraine during the night, Ukraine President Petro Poroshenko told British Prime Minister David Cameron, according to the presidential website.
Russia, a major oil and natural gas producer, denied its forces crossed into Ukraine and accused Kiev of trying to sabotage deliveries of humanitarian aid, Reuters reported.
“The market is keeping an eye out for any geopolitical tensions and that is why we are seeing this spike,” said Carl Larry, chief executive officer at consultancy Oil Outlooks in Houston.
“We have had a big run to the downside over the last couple of days so a lot of the shorts are getting nervous,” Larry added.
Ahead of the rally, Brent and US crude futures had posted modest gains attempting to stabilise after signs of faltering economic growth and ample global crude supply sent Brent to a 13-month low on Thursday and US crude to its lowest price since January.
Front-month October Brent crude rose $1.46 to settle at $103.53 a barrel, after retreating from a session high of $103.76. The international benchmark lost 1.7% on the week.
The September Brent contract expired on Thursday and fell $2.27 to go off the board at $102.01, the lowest settlement for front-month prices since June 2013.
Brent’s premium to the US contract increased to $8.82 a barrel intraday on Friday, the widest spread since June, but swung back in to settle at $8.21.
US September crude rose $1.77 to settle at $97.35 a barrel, after hitting $97.41 earlier in the session. US crude posted its fourth straight weekly loss, down 0.6% on the week.
Oil prices were pressured this week by news of Opec crude production at a five-month high and Libya’s increasing exports and reopened ports.
Robust US production and government data showing an increase in the nation’s commercial oil inventories also weighed on crude prices.